Nigeria is holding talks with the Export-Import Bank of China for a $1.5 billion loan to boost processing of rice and cassava in Africa’s most populous country, Agriculture Minister Akinwunmi Adesina said.
The loan is being sought on “concessionary terms at a 2 percent interest rate with a repayment period of 20 years,” Adesina said in an interview yesterday in Abuja, the capital. “We want to reduce our import dependency.”
Part of the loan will fund the procurement of 100 large-scale rice mills, with a combined capacity to process 2.1 million metric tons of rice a year, from Chinese companies, Adesina said. The rest will be devoted to expanding capacity for processing cassava into flour to substitute wheat flour and reduce imports, he said.
Nigeria, which has more than 160 million people, spends $10 billion annually importing rice, wheat, sugar and fish, according to the Agriculture Ministry. While the country grew enough food to feed itself in the 1960s, it is now the world’s largest importer of rice and sub-Saharan Africa’s biggest importer of wheat and sugar.
Oil accounts for more than 90 percent of Nigeria’s export income, according to the central bank. Bonny Light crude, its leading grade, gained 0.3% to $109.07 a barrel as of 9:50 a.m. in London, increasing more than 8% in the last six months. The naira rose 0.2 percent to 156.930 a dollar as of 10.46 a.m. in Lagos, the commercial capital, according to data compiled by Bloomberg.
The government will provide “single-digit interest rates for all agriculture loans” from next year, Adesina said. At least 10 million mobile phones will be distributed to farmers in 2013 to provide weather and market information as well as extension services on the use of inputs including seeds and fertilizer, he said. Nigeria’s annual inflation rate rose to 11.7 percent in October.
Africa’s top oil producer is also expecting $500 million in funding from the World Bank, at least $250 million from the African Development Bank and an $80 million loan from the International Fund for Agricultural Development to fund agriculture next year, according to the minister.
The government’s strategy is to help small-scale farmers, who produce most of the country’s food, with access to credit and improved farming methods while encouraging private investments in large-scale farming. At least $8 billion worth of investment commitments in agriculture were secured by President Goodluck Jonathan’s administration this year, Adesina said.
Food production rose by about 8.1 million tons, or 41 percent of its 20 million-ton four-year target, this year, creating a buffer food stock against floods, he said.
In September, Nigeria experienced its worst flooding in decades leaving farms, food stores, highways and oilfields inundated. At least 363 people died and 2.2 million were displaced, according to figures from the National Emergency Management Agency.
The government started a dry-season rice farming program last month, helping farmers cultivate 330,000 hectares (815,000 acres) of land with an estimated output of 1.8 million tons expected, Adesina said.